Technology companies continue to show promising growth driven by innovation and a vast addressable market.
Global GDP growth hinges on multiple factors, including productivity and efficiency. The focus on technology and innovation is a crucial driver of growth. As the United States pivoted away from manufacturing, its technological edge has been pivotal in maintaining its status as the world’s leading economy. Consequently, IT stocks are set to remain in the spotlight. In a dynamic world of technological advancements, adding compelling narratives to the portfolio of IT stocks is essential for sustained progress.
Consider this technology being a catalyst for GDP growth with an example. Estimates indicate that blockchain technology is poised to inject $2.1 trillion into the global GDP by 2030. The benefits of utilizing blockchain technology are numerous, including reduced cost, enhanced speed and efficiency, improved security, and privacy, among others. Similarly, the impact of artificial intelligence on growth and efficiency is already evident, with the potential to contribute up to $15.7 trillion to the global economy by 2030.
Given the substantial impact of IT on the US GDP, it’s paramount to explore seven top IT stocks that merit consideration.
Investing in Arm Holdings (ARM)
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Arm Holdings (NASDAQ:ARM) has experienced steady upward momentum. The current levels present an attractive opportunity for fresh exposure to this provider of central processing unit products and related technologies.
Notably, Arm Holdings has deployed a staggering 270 billion Arm-based chips globally. Furthermore, 99% of smartphones are powered by Arm-based processors, signifying the company’s strong global market presence.
Previously focusing on general-purpose CPUs, Arm has now shifted to a market-specific tailored solution strategy, targeting sectors such as automobiles, mobile, consumer electronics, IoT, and cloud. The company also boasts healthy earnings, evident in its fourth-quarter revenue growth of 29% year over year to $806 million.
Additionally, the company’s free cash flow (FCF) amounted to $169 million, indicating an annualized FCF of $700 million, underscoring Arm Holdings’ robust growth trajectory. Anticipating an annual FCF of $1 billion in the coming year is not unwarranted.
Exploring Amdocs (DOX)
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Another noteworthy IT stock is Amdocs (NASDAQ:DOX), which has been trading laterally. However, an impending upside breakout seems likely given the stock’s attractive forward price-earnings ratio of 14.3. Additionally, DOX stock offers a dividend yield of 1.87%.
Currently, the company stands to capitalize on a substantial opportunity in the deployment and monetization of 5G and fiber networks, with the serviceable addressable market projected to expand to $57 billion by 2025.
Furthermore, the company recently unveiled Amdocs amAIz, a cutting-edge, enterprise-grade generative AI (GenAI) framework anticipated to address specific challenges in the telecom industry, encompassing security, data privacy, scalability, and data governance complexity.
It’s noteworthy that Amdocs garnered $698 million in free cash flows last year, coupled with a robust balance sheet boasting a liquidity buffer of $1.2 billion. This affords ample flexibility to invest in innovation and pursue potential acquisition opportunities.
Considering CrowdStrike (CRWD)
Amidst the buzz around cybersecurity, CrowdStrike (CRWD) is a prominent IT stock to take note of. With the increasing risk of cyber threats, cybersecurity companies like CrowdStrike are garnering attention.
Tech Stocks Ready to Soar
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CrowdStrike – A Cybersecurity Giant
CrowdStrike (NASDAQ:CRWD) has soared about 187% over the last year. Despite potential corrections, CRWD remains one of the top IT stocks to hold at the moment.
With its CrowdStrike Falcon platform used for threat detection and breach identification, the company is well-positioned in the rapidly growing cybersecurity space.
CrowdStrike offers a comprehensive suite of solutions including corporate endpoint security, managed security services, and cybersecurity generative AI. This broad offering expands its addressable market to a whopping $100 billion, a figure set to reach $225 billion by 2028, indicating sustained growth potential.
UiPath – Riding the AI Wave
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UiPath (NYSE:PATH) is a leading provider of robotic process automation solutions. With an impressive 57% surge in the past 12 months, PATH is riding on strong AI-driven tailwinds.
UiPath caters to various industries such as the public sector, healthcare, financial services, and manufacturing, positioning it for growth as these sectors expand. The company’s reported revenue of $326 million in Q3 2024, a remarkable 24% annual increase. Notably, the ARR has swelled to $1.38 billion, fueled by significant product innovations and industry partnerships.
ServiceNow – A Cloud Powerhouse
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ServiceNow (NYSE:NOW) has delivered a remarkable 72% return over the last 12 months. However, with a forward price-earnings ratio of 72, caution is warranted.
Specializing in cloud-based platforms and services for organizations, ServiceNow reported an impressive 24% revenue growth in Q4 2023, amounting to $2.4 billion. The company also revealed a contract revenue of $8.6 billion for the next 12 months as of December 2023, emphasizing its potential for future growth.
Stem – Powering the Energy Revolution
Exciting Growth in Clean Energy and IT Stocks
The Potential of Stem
Stem (NYSE: STEM) harnesses the power of artificial intelligence to provide innovative clean energy solutions and services. Positioned within a market with compelling long-term growth prospects, Stem appears to be a promising investment opportunity.
The company’s potent AI-driven enterprise platform, Athena, empowers organizations to maximize the value of their clean energy assets. Stem’s comprehensive suite of solutions enhances returns across clean energy initiatives, a crucial differentiation in a landscape where many emerging clean energy entities are grappling with profit margin challenges. Notably, Stem offers a combination of software, hardware, and services to drive its mission forward.
During the third quarter of 2023, Stem reported robust revenue of $134 million, signifying a 34% year-on-year increase. An additional exciting development is Stem’s anticipated achievement of positive EBITDA for the year. With a contracted backlog valued at an impressive $1.84 billion, the company’s outlook indicates encouraging prospects for sustained revenue growth and margin expansion.
The Bright Future of Photronics
Photronics (NASDAQ: PLAB) stands as the sole pure-play photomask company in the United States. Positioned as one of the top IT stocks to consider, it maintains 11 manufacturing facilities spread across North America, Europe, and Asia.
One compelling aspect is Photronics’ anticipation of improved margins within high-end and mainstream integrated circuits. This anticipated development, coupled with operating leverage, engenders a positive forecast for EBITDA margin expansion and heightened cash flow potential. Notably, the company’s expansion efforts in China suggest the likelihood of accelerated revenue growth.
